Introduction to Consumer Behaviour

Welcome to Topic 1: Introduction to Consumer Behaviour.

We are all consumers; we buy things every day. Some of our purchase decisions are well-considered, while others may be based on impulse buying. Some buying decisions may be short-lived while others will affect our lives in the future and even our families, friends, and the environment. Consumers want companies to understand their expectations, wants and needs.

In this topic, you will learn:

• What consumer behaviour is 
• How consumer behaviour relates to marketing 
• How consumer behaviour links to sociology, psychology, anthropology, economics, and neuroscience.

These topics relate to the Subject Learning Outcomes:

1. Explain the basic psychological and sociological principles, theories and models influencing consumer behaviour.
2. Discuss the current trends in consumer behaviour and apply them to the marketing mix.

Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.

Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.

Introduction to consumer behaviour

The world has become more transparent as information is readily available at consumers’ fingertips. Digital mobile devices allow consumers to buy and consume products anytime and anywhere. The use of technology has added complexity as consumers are increasingly influenced by information from other consumers via forums, review sites, blogs, and social networks and tend to pay less attention to traditional advertisement (print, radio, TV). Consumers are also more concerned about the environment and local communities. They want to purchase from businesses that are doing the right thing by the environment and have sustainability policies and frameworks in place.

Understanding consumers and their changing behaviours is an indispensable component of marketing strategy. The following figure summarises all components of consumer behaviours that marketers and researchers study and how they influence marketing strategies and tactics (Schiffman & Wisenblit 2019).

Studying consumer behaviour is extremely important to reach the right customer at the right time with the right information and right product to influence the consumer's choices.

What is consumer behaviour

The study of consumer behaviour is concerned with the reasons behind the why, what, when, where and how consumers make purchase decisions. It includes how consumers research and evaluate products, the decision-making process, the use of products, services, and experiences, and the disposal thereof. It also includes decisions about politicians or which charities to donate to (Schiffman & Wisenblit 2019). 

The following definition for consumer behaviour looks beyond product and services to:

Businesses must have a clear understanding of the factors that contribute to consumer decision making to be successful in a competitive globalised world. Consumer behaviour is about the different behaviours that individuals, organisations, or groups demonstrate to research, evaluate, select, purchase, use and dispose of products, services, activities, experiences, people, and ideas that help them fulfil their needs and wants. The study of consumer behaviour seeks to gain greater insights into what, why, how, where, and when of consumer buying decisions, associated emotions and thinking processes, pre- and post-purchase evaluation processes, and how these elements and experiences influence future purchase decisions. Some purchase decisions are more involved than others. For example, purchasing an everyday household item such as bread or toilet paper is less involved than purchasing a TV, smartphone, or a holiday. Qualitative and quantitative consumer research seeks to provide the right insights into consumer behaviour so that marketers can choose the right marketing tactics (Schiffman & Wisenblit 2019).

Consumers can either be personal consumers or organisational consumers who purchase goods for their own use or for the use by someone else, that is why we distinguish between user and buyer. If the purchase is intended for personal use, the individual is often referred to as ‘end user’ or ‘ultimate consumer’. Organisational consumers consist of profit and not-for-profit organisations, institutions, and the public-sector agencies that acquire goods and services to manage their organisations (Schiffman & Wisenblit 2019).

Consumer behaviour is a process. The following figure outlines the consumption process from the consumer and the marketer’s perspective (Solomon 2020).

Consumer's perspective

Prepurchase issues

• How does a consumer decide they need a product?
• What are best sources of information for alternative choices?

Purchase issues

• Is acquiring the product a stressful or pleasant experience?
• What does purchase say about consumer?

Postpurchase issues

• Does product provide pleasure or perform as expected?
• How is product eventually disposed of and what are the environmental impacts?

Marketer's perspective

Prepurchase issues

• How are consumer attitudes to products formed/changed?
• What cues are used to infer product superiority?

Purchase issues

• How do situational factors (for example, time pressure, store displays) affect purchase decision?

Postpurchase issues

• What determines customer satisfaction and whether they'll buy again?
• Do they tell others about the experience and influence their purchase decision?

^{Adapted from Consumer behavior: Buying, having, and being, by Solomon, MR 2020, 13th edn., Pearson Education Ltd.}

Knowledge check

Complete the following multiple choice question.

How consumer behaviour relates to marketing

The only constant in business environment is rapid change. Marketers need to be aware of changes regarding product life cycles, increased environmental awareness, consumer protection and legislations, globalisation, and technology advancements and how these impact on consumer behaviour (Schiffman 2019).

It can be said that businesses who understand target consumers' needs and motivations, their preferred method of interaction, and channels during the search, evaluation and purchasing phase are those that succeed in a competitive marketplace. Technology enables personalisation of communication (email, Apps, social media, blogs, community discussion forums, etc.) and the gathering of new data that provides the foundation for identifying new trends and opportunities. Shorter product life cycles have become the new norm as the speed of product development and innovations increases. Consumer research is critical to provide insights into new product requirements and identify how people react to certain marketing stimuli for more targeted communications, promotions, and advertisements. The service sector is growing globally. A key characteristic of the service industry is the intangibility and perishability of the service that requires service businesses to develop deep insightful customer knowledge for their marketing strategies to be effective. The availability of research data from cross-cultural research helps marketers to develop successful international marketing strategies (Sethna & Blythe 2019).

Research also helps to identify sources that may lead to customer deception or confusion. This valuable insider information has helped public policymakers in their efforts to better protect customer interests and, in some cases, see court rulings against certain advertising campaigns or pricing practices that are misleading consumers.

The concepts of marketing have evolved from the production concept (production and operations oriented), product concepts (quality and performance oriented), selling concept (persuasion oriented), to the marketing concept (needs and wants oriented) and the societal marketing concept (needs, wants, value, sustainability, and social responsibility orientation). The societal marketing concept is a further advancement of the marketing concept that aligns with the changing times we live in and ensures marketers consider principles of social responsibility, lowering the impact on the environment while improving society. However, this long-term approach may sometimes conflict with short-term marketing goals (Schiffman & Wisenblit 2019).

Research has shown that consumers are highly complicated individuals with differing social, functional, and psychological needs and vastly differing expectations. Marketers brief consumer researchers on the marketing problem they want to get solved. The research may focus, for example, on identifying changing media habits, latent consumer needs, perception of products or product features, brand attitudes, or measuring the effectiveness of advertising campaigns. Often research studies built on existing consumer behaviour knowledge from secondary data sources including website and social media data. New insights are gained by conducting primary qualitative and/or quantitative research through focus groups, interviews, observational studies, surveys, or a combination of several methods. At the core is the question of what drives the purchase decision in the moment of purchase and whether it is a cognitive (highly involved) or an intuitive (emotional) decision-making process driven by impulses and moods prevalent at the time. Cross-cultural and global consumer behaviour studies are rising as larger corporations or multinationals are trying to identify homogenous global target segments to successfully run global marketing campaigns (Sethna & Blythe 2019).

Savvy marketers today have come to realise that to develop and sustain a competitive advantage, the focus must be on four drivers: delivering customer value, developing customer trust, increasing customer satisfaction, and achieving customer retention. Customer value is the notion of perceived value in terms customer benefits and the resources used to obtain those benefits. The customer value proposition has become the basis for successful positioning. Consumer trust is a challenging but critical concept as it forms the basis of any relationship between a customer and a company and helps build customer loyalty. Customer satisfaction is based on meeting or exceeding (ideally not falling short) of expectations that have been built through advertising, Word of Mouth, or previous interactions and experiences. Research indicates that increasing customer satisfaction and reducing customer defection have a direct correlation to increasing company profits. Loyal customers tend to buy more products, are less price-sensitive, pay less attention to competitive advertisements, spread positive Word-of-Mouth, and refer other customers. Companies that can identify customers at an individual customer level can go beyond traditional customer segmentation and group their customers according to their customer value (Schiffman & Wisenblit 2019).

Different people have different needs shaped by the world they are born into and the cultural, social, and political contexts, creating rich diversity. Consumer researchers aim to identify commonalities amongst diverse local and global consumer markets. Marketing segmentation enables marketers to target large populations of diverse customers clustered into homogenous segments with common characteristics (demographic, geographic, psychographic, behavioural or others) and adequate buying power. Market segmentation involves breaking down broad customer markets into sizeable and manageable segments or sub-segments using specific segmentation criteria. Segmentation allows for identifying consumer media habits, product consumption patterns, product gaps, and how products and services should be positioned or repositioned. By defining the core value proposition that delivers core customer benefits to the identified target segment, the marketer can ensure that the right product or service is targeted at the right customer at the right time, by executing a highly targeted marketing mix (often referred to as the 4P’s of marketing, for example, product, price, place, promotion or the 7 P’s of marketing which also includes people, process, physical evidence). The 7 P's of the marketing mix are an easy way to understand what marketers do to try and influence consumer behaviours. The following outlines how consumer behaviour relates to the 7 P’s (Schiffman & Wisenblit 2019).

Click on each of the headings to read more about each P.

Product

The bundle of benefits consumers acquire is the basis of their decision-making. Deciding which benefits are essential, which are desirable, which do not matter and which are actually not benefits at all but drawbacks is the starting point for all rational decisions.

Price

The cost of a product goes beyond the price tag in most cases. If the product is complex, there will be a learning cost attached to figuring out how to use it: if the product is dangerous, there may be a cost attached to consequent injury. If the product is visible to others, there may be embarrassment cost. Some products require more effort to use - an electric can opener is easier to use than a hand-operated one, but costs more money. In some cases, these extra costs may exceed the price tag - consumers will take account of them, and will weigh them in the decision, but producers will only be able to obtain the price on the tag.

Place

Convenient locations for making purchases are essential; in fact it would not be too much to say that the easier marketers make it for consumers to find the product, the more product will be sold - this is partly why some brands pay a lot of money for their products to be displayed prominently in numerous retail outlets. Like price, the location can affect the decision in ways that do not benefit the producer - equally, producers can sometimes charge a premium for delivering location benefits. Corner shops (convenience stores) used to be a good example: although they are invariably more expensive than supermarkets, being within easy reach of home offers a clear advantage that is paying more for. However, this level of advantage has not gone unnoticed by the big retailers who have, over the past few years, utilised their price advantage and muscled in on this turf by opening smaller local stores, for example 'Sainsbury's local', 'Tesco Express', 'Little Waitrose'.

Promotion

Promotion is not something that is done to consumers, it is something they consume. People surf the web, buy magazines, watch TV shows, go to the cinema and ride on public transport. Although they do not usually do these things in order to be exposed to advertisements, when bombarded with advertising, they usually pay at least some attention to them and frequently they enjoy the experience. Furthermore, people often use media such as classified advertisements and directories (offline and online) in an active search for information about goods they might like to buy.

People

Business is not about money, it is about people. The people who run businesses and deal with the public need to understand how other people react in purchasing situations. In some cases, the product is the person: people, consumers, become loyal to the same hairdresser, the same doctor, the same restaurant chef. Unsuprisingly, the people who work with the customers - who are customer-facing - tend to be the most customer-oriented. Proximity to the customer is a more important factor in this than is the attitude and behaviour of senior management (Hui & Subramony 2008). In other words, senior management may or may not be customer-oriented, but the very nature of working with customers will in itself tend to focus people on customer need.

Physical Evidence

Physical aspects of the service encounter often relate to the pleasure one feels from receiving the service rather than the practical aspects. The surroundings and ambience of a restaurant, the food itself and the quality of the menus all affect people’s perception of the ‘whole’ service.

Process

The way in which services are delivered affects the context within which people buy as well as their propensity to buy. For example, a meal out might be a 10-minute lunch stop at a fast-food outlet, or it might be a prolonged, eight-course dinner for two in a Michelin-starred restaurant. The process is completely different in each case, and so is the price: in the first case, the consumer may only go through a limited problem-solving process; in the second case, the process may well be longer because the need to get right is greater. This is called involvement.

Consumer behaviour and its link to sociology, psychology, anthropology, economics, and neuroscience

The study of consumer behaviour is an interdisciplinary field with theories and concepts from a variety of disciplines such as economics, psychology, anthropology, neuroscience, and sociology (Solomon 2020), these are outlined in the following figure. You can find consumer researchers with training and interest in a wide range of disciplines from psychology to psychophysiology to sociology and literature and they will approach the research through their disciplinary lens.

Psychologists study mental processes, including what people think, how people learn, their basic drivers of needs, what motivates them, how they perceive products and make sense of the world (i.e., needs, personality traits, perception, learned experiences, and attitudes) (Sethna & Blythe 2019).

Sociology is the study of the development, structure, functioning, and problems of human society. Sociologists study group dynamics and behaviours of family and friend groups, class and culture, and self-image, which is predominantly derived from feedback from others. The self-image influences the cloth we buy, the video games we play, the music we listen to, the food we consume, and much more (Sethna & Blythe 2019).

Anthropology is a wide-ranging academic discipline and covers all aspects of studying what makes us human, both in the past and in the present. The socio-cultural aspects of anthropology, such as similarities or differences in race, gender, nationality, and class are highly relevant to consumer behaviour in creating an understanding of the ‘meaning of life’. In short, anthropologists compare human societies, cultures, and developments (Sethna & Blythe 2019).

Economists study demand, both micro- and macro-economics. This discipline has provided consumer behaviour theorists with various useful concepts that help explain the rational part of consumer behaviour, such as the economic choice and elasticity of demand (Sethna & Blythe 2019).

Neuroscientists study how the human brain works and how it relates to individual behaviours. Neuro-economics seeks to explain people’s economic behaviours in the context of individual decision-making, social interactions, and external factors like the market (Sethna & Blythe 2019).

The following table provides a more comprehensive view of the interdisciplinary research issues in consumer behaviour relating to magazine usage and the level at which each tackles research issues that can be characterized in terms of their focus on micro-versus macro-consumer behaviour topics (Sethna & Blythe 2019).

The interdisciplinary context is as important as the input, process, and output of consumer decision-making. The ‘input’ includes four elements: segmentation and targeting implemented through the marketing mix, communications from marketers to consumers (i.e., advertising, promotions etc.), sociocultural dimensions (i.e. family, friends, peers, cultural values, ethnicity, etc.), and communications among consumers (i.e., Word-of-mouth, referrals). The ‘process’ emanates from psychological factors (i.e., study of the human mind and mental factors) and the cognitions that drive people to take actions and includes how they act, perceive, learn (i.e., motivation, personality traits, perceptions, learning, and attitudes). The ‘output’ includes purchase behaviour and post-purchase evaluation. The following figure can help you to understand the input, process, and output of consumer decision-making (Sethna & Blythe 2019).

Marketing mix

• Product
• Promotion
• Price
• Distribution

Sociocultural influences

• Reference groups
• Family
• Social class
• Culture and subculture

Communication sources

• Advertising
• Buzz agents
• Customised messages
• Social media (owned or paid for, self-generated)
• Word-of-mouth: advice and recommendations

Psychological influences

• Needs and motivations
• Personality traits
• Perception
• Attitudes

Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.

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The following learning tasks will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.

Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)

In-seminar learning tasks

The in-seminar learning tasks identified below will be completed during the scheduled seminar. Your lecturer will guide you through these tasks. Click on each of the following headings to read more about the requirements for each of your in-seminar learning tasks.

Welcome to your post-seminar learning tasks for this week. Please ensure you complete these after attending your scheduled seminar with your lecturer. Your lecturer will advise you if any of these are to be completed during your consultation session.

Click on each of the following headings to read more about what is required for each of your post-seminar learning tasks.

Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.

Click here to access your consultation session.

Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.

Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)

• Taufik, D, Kunz, MC & Onwezen, MC 2021, ‘Changing consumer behaviour in virtual reality: A systematic literature review’, Computers in Human Behavior Reports, 3:100093.
• Gilal, NG, Zhang, J & Gilal, FG 2018, 'Linking product design to consumer behavior: the moderating role of consumption experience', Psychology Research and Behavior Management, 11:169-185.
• Kemp, EA, Borders, AL, Anaza, NA & Johnston, WJ 2018, 'The heart in organizational buying: Marketers’ understanding of emotions and decision-making of buyers', Journal of Business & Industrial Marketing, 33(1):19–28.

References

• Almquist, E, Senior, J & Bloch, N 2016, ‘The Elements of value’, Harvard Business Review, 4(9):47-53.
• Blackwell, RD, Miniard, PW & Engel, JF 2001, Consumer behaviour, 9th edn., Mason.
• Consumer Behavior 2017, Chapter 1 - What is consumer behavior, streaming video, YouTube, https://www.youtube.com/watch?v=gtfPU6nTa9k
• Hoyer, WD, MacInnis, DJ, Pieters, R, Chan, E & Northey, G 2018, Consumer behaviour, Asia-Pacific edn., Cengage Learning.
• INSEAD 2018, Understanding consumer behaviour from the inside out, streaming video, YouTube, https://www.youtube.com/watch?v=XowaDm1GEVk
• Jacoby, J 1976, 'Consumer psychology: An octennium', Annual Review of Psychology, 27(1):331-58.
• Kumar, V 2018, ‘Transformative marketing: The next 20 years’, Journal of Marketing, 82(4):1–12.
• Schiffman, LG & Wisenblit, JL 2019, Consumer behavior, 12th edn., Pearson Education Ltd.
• Sethna Z & Blythe, J 2019, Consumer behaviour, Asia-Pacific edition, Sage Publications Ltd.
• Solomon, MR 2020, Consumer behavior: Buying, having, and being 13th edn., Pearson Education Ltd.
• Vimalathasan, V & Putros, K, 2015, Beyond Meat: Changing consumers’ meat preference, Richard Ivey School of Business Foundation, Version 2018-09.24.